The BizRadio Network's slogan is “the sound of your money growing,” but for about 50 investors, it's sounding more like their money disappearing.

The AM radio network — which broadcasts investment advice and other business information in Houston, Dallas, San Antonio, Denver and Colorado Springs — received millions raised from investors under false pretenses, according to a lawsuit filed last week by the Securities and Exchange Commission.

Kaleta and Dan Frishberg, who appears on BizRadio as “The Money Man,” were among the network's founders. Kaleta also was part owner and chief compliance officer for DFFS.

Signed consent order

Kaleta didn't return my calls. He signed an SEC consent order neither admitting nor denying wrongdoing and agreeing not to violate securities laws in the future. His firm also agreed to have a court-appointed receiver take over its operations.

Neither BizRadio, which was still broadcasting Thursday, nor Frishberg's firm was accused of wrongdoing, but they were named as “equitable relief defendants,” meaning they must repay the money.

“In order to reverse what injustice has taken place here, so that the victims of this fraud can be made whole, what we're seeking is that the relief defendants relinquish their possession of assets to which they have no rightful claim,” said Timothy McCole,the SEC attorney handling the case.

Frishberg said he and Kaleta are no longer partners. His firm and BizRadio will repay the debt under the terms of the promissory notes, he said.

“We're eager to have them hurry up and appoint a receiver and get it going,” he said.

Awaiting payments

Despite Frishberg's eagerness, neither BizRadio nor DFFS has made the payments required under the notes so far, the SEC's lawsuit said. A receiver is likely to demand full repayment of the notes so it can be returned to investors.

(Disclosure: I have appeared as a guest on BizRadio programs in the past, though not recently.)

Frishberg said investors knew the money was being pumped into the radio network and that Kaleta simply didn't have the proper paperwork.

“He said he was going to lend money to companies, and he did lend money to companies,” Frishberg said. “These were not complaints from Kaleta's investors. These were documentary things.”

One investor I spoke with disagrees. He said he was never told his money was going to companies Kaleta controlled.

Where it went

The SEC said Kaleta told investors their money would be used for short-term loans to creditworthy businesses.

Instead, he lent $6.7 million to Frishberg's firm and BizRadio, “two financially precarious ... affiliates who had no reasonable prospect of repaying the loans,” according to the lawsuit. Kaleta used another $1.5 million for his personal expenses, including $10,000-a-month credit card bills and a Mercedes, the SEC claims. Some note proceeds also were used to pay interest to other investors, the lawsuit said.

Kaleta's firm loaned BizRadio $3.6 million of the money during the first eight months of this year. During that same time, the radio network lost $1.6 million and “its only significant assets were illiquid radio-station licenses,” the SEC's lawsuit said. Another $1.2 million went to DFFS, which “did not have sufficient revenue or assets to service such a loan,” according to the lawsuit.